TAX FREE EXCHANGE (1031)
Section 1031 of the IRS code allows us to exchange real estate held for business or investment purpose if the relinquished property and the replacement property are of equal value and both properties are help for productive use in a business or for investment. There is no income tax on a qualified exchange, but you cannot receive money from the exchange. It must be an exchange of real estate for real estate. You may use a qualified intermediary to hold funds, and notify the intermediary within 45 days of the sale of relinquished property, of the identity of the new replacement property. The purchase of replacement property must be completed within 180 days of the date of the sale of the relinquished property. Please consult your CPA before attempting a 1031 tax free exchange. This article is not an attempt to provide legal advice.